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Marcus Giles and the Hometown Discount

Second baseman Marcus Giles joined the San Diego Padres this week, agreeing to a one-year contract for $3.2 million and an option year. Having passed his physical, he should be introduced as a member of the club today. Giles and his brother Brian, also a Padre, grew up near San Diego and have each signed with their hometown team for less than market value. In doing so, the brothers have given the team the option of pursuing higher priced talent as a means of achieving the ultimate goal of winning the World Series.

Often overlooked among baseball’s myriad of celebrity GMs, Kevin Towers has done a terrific job of assembling a capable and young roster. He does not fit into the neat pre-packaged and ill-defined GM categories of stats and scouts. Instead he has focused on filling needs and making sensible deals operating in his budget and winning his division, albeit a weakened division. The 2007 San Diego Padres may be the best team he has assembled, including the NL Champion Padres of 1998. Those Padres, led by Greg Vaughn, Kevin Brown and the late Ken Caminiti, was a veteran team that after losing the World Series fell apart. The back to back division titles seems like a starting point for the resurgent and youthful Padres. Marcus Giles at 29 is the oldest starting infielder on the club. And with young sluggers at the corners in Adrian Gonzalez and Kevin Kouzmanoff and 2004 Rookie of the Year runner-up Khalil Greene at short, the infield is a strong point.

Giles’s former team appears for the first time in 15 years to be in disarray. Capped by a hard budget from Time Warner as it pursues the sale of the club, the Atlanta Braves were forced to non-tender Giles, knowing he would receive far more in arbitration than the $3.2 million that the Padres will pay him. The Braves tremendous run atop the National League’s Eastern Division was extended by creative moves in the last few years. Their decline will need to be managed with equal competence. Unlike the Padres, the Braves future does not look as bright.

Two teams going in opposite directions. JC Bradbury, professor and Braves fan, blogs over at Sabernomics.com. His take on Marcus Giles and the Braves inability to move him illustrates the trap the Braves are in with several of their players.

Now, it looks like Giles is a .770 OPS player, which is about the NL average. We knew 2003 was a fluke, but so were 2004 and 2005. But still, he has a good defensive reputation and he’s not embarrassing himself with his bat. What’s the deal?

It’s not that no one wants him, but that the Braves are in an awkward position. He’s entering his final year of arbitration and he projects to garner a salary of about $6 million. Because his stats have been over-measuring his true ability, he’s been getting bigger arbitration raises than he otherwise would have for the past two years. I estimate Giles dollar value to the Braves in 2006 to be $5.55 million (slightly more than Jeff Francoeur’s value—where’s Marcus’s Delta commercial?). Using his PrOPS projection, he was expected to have generated about $5.9 million. This means that the projected $6 million he’ll likely get in arbitration is almost exactly what he is worth.

I think this explains what the Braves are having so much trouble moving him. Let’s pretend that Giles is a $10 million player. The team that acquires him will have to pay Giles $6 million. This means that a team wanting to acquire him would be willing to trade $4 million in assets to acquire Giles; and in return, the Braves would receive $10 million in return ($6 million freed up from not having to play Giles + $4 million in other assets). But, Giles’s value is equal to his salary. There is very little that a team would be willing give up beyond $6 million to get Giles—we’re talking a low-A weak prospect. Scott Linebrink was never an option. This is why the Braves can’t find any takers. When a player signed to an over-paying long-term contract a team will often have to pay part of the the traded player’s salary. But, in this case, the cash-strapped Braves can get his salary off the books by simply declining to offer him arbitration.

Bradbury’s point explains a lot of deals that on first glance don’t make much sense. Why did the Yankees give almost nothing for Bobby Abreu? Because they were willing to take on his whole contract, which while just adding to the luxury tax bill, is still insignificant to the Yankees, who measure success less in profits than in titles. Why can the Red Sox not find good value for Manny Ramirez? Most clubs value his production at $19 – $20 million and don’t want to give up more than what they will have to pay Ramirez. Until some team values Manny’s production at $25 to $30 million, the Red Sox will not get the fair return they are hoping for and Manny will just have to be Manny in Boston.

This also explains why the Red Sox dealt Bronson Arroyo after signing him to a hometown discount kind of deal. His estimated value to another team was greater than the salary they would be committed to pay. As a result, a young power hitter was a small price to pay for a slightly better than American League average pitcher who turned into a well above National League average pitcher.

One final note on the Braves, the decrease in payroll leaves the Braves in a difficult position, but Bradbury notes, this is not the responsibility of ownership.

With the release of Marcus Giles and the Braves failure to even make an offer to Tom Glavine, many fans have been complaining about the $80 million payroll constraint that Time Warner has imposed on John Schuerholz. This isn’t a bad ownership problem. It’s not like John Schuerholz was handed a memo to cut payroll last week. He’s been complaining about the constraint since he cut Kevin Millwood lose after the 2002 season—which was an excellent move to avoid overpaying Millwood.

$80 million isn’t too paltry a sum to run a ballclub. Eight NL teams had payrolls less than that in 2006. One of them made the playoffs (San Diego) and another won 78 games—one game less than the Braves—with $15 million (Florida). In the AL, Minnesota and Oakland made the playoffs on $60 million payrolls. And Cleveland and Texas won about the same number of games as the Braves with payrolls under $70 million. Now, this doesn’t mean that a larger budget wouldn’t make things easier. I could do a lot more things if I had more money, but there’s not much I can do beyond working within my constraints.

Salary disparity is getting worse and worse in baseball, but the parity of championships in baseball is remarkable. Since the Yankee juggernaut began to fade, there has not been a repeat World Series winner. In Football, the Patriots meanwhile have won three titles in that same span. And football does have a salary cap. A salary cap is not necessarily the answer. Fiscal restraint and good management are. The continued success of the Oakland A’s, San Diego Padres and yes, Florida Marlins say that you can compete and succeed getting more for less. Those three teams have combined for as many titles as the big spending Red Sox, Yankees, Mets and Cubs in the last six years. That Yankee juggernaut was based on homegrown talent supplemented with reasonably priced veteran role players. It’s still the best way to build a winner. The Padres are using it. The Braves need to get back to it.

Cross posted at Ennuipundit

 
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Comments
 

But Giles was a homegrown player, as is Andruw Jones, Chipper Jones, Brian McCann, and a whole array of their other starters. The problem is that they can’t afford to keep all these guys when they get free agent eligible. More on that here.

It’s true that the NFL has had more repeaters in recent years than MLB. Mostly, I think, it’s because the Pats have figured out how to manage the cap better than other teams (although that gap is eroding) and the Pats got lucky with a 6th round pick on Tom Brady and have locked him up to a long term deal. One player can’t carry a baseball team like a QB can a football team.

Posted by James Joyner | December 20, 2006 | 10:36 am | Permalink
 

Absolutely true. I am inclined to agree with Bradbury’s notes regarding recent personal moves and their limited benefit to the Braves. Was Renteria the right guy to play shortstop? Keeping the less expensive Betemit at short, would have allowed them to pay Giles more, and they would have retained Andy Marte. I think the jury is still out on Marte, but lately Schuerholz has been dealing too much youth for the wrong veterans. Dan Meyer, Juan Cruz, Jose Capellan, Zach Miner and Roman Colon have all been dealt in the last couple of years, for Tim Hudson, Dan Kolb and Kyle Farnsworth. Kolb and Farnsworth are gone, but Hudson is not worth the salary he is drawing. And that impacts how much the other players get.

I know they can’t keep all the talent they develop. But they can do a better job of major league scouting to make sure the higher priced talent they bring in is going to perform.

You suggested a firmer salary cap, but I don’t think that’s the answer for the Braves. Giles signed with the Padres for less than he made last year in Atlanta. The solution for Atlanta would be a bigger budget.

Posted by Ennuipundit | December 20, 2006 | 11:43 am | Permalink
 

A bigger budget would be nice, to be sure!

Agreed on getting too many of the wrong veterans. Although the Hudson move was considered a steal at the time–he was signed for a reasonable price and was one of the game’s top starters in what should have been his prime. There was no way to forecast his breakdown.

The team has been vexed for years in trying to find decent late-inning relief pitching. Smoltz was the only stud closer that remained consistent but he desperately wanted back in the starting lineup and was needed in that role.

Posted by James Joyner | December 20, 2006 | 02:14 pm | Permalink
 

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